A federal appeals court has cleared the way for the Internal Revenue Service to continue its investigation of God’s Storehouse, a church that operates a thrift store and coffee shop that was founded by a current state senator and his wife.
The 10th U.S. Circuit Court of Appeals ruled against God’s Storehouse on Tuesday, finding that the IRS could proceed with seeking bank records as part of its inquiry that arose from Rick Kloos’ successful campaign for the Senate in 2020.
The Topeka Capital-Journal reported in 2020 about Kloos’ political signs in his state Senate race, which promoted that he was the founder of God’s Storehouse.
In September 2020, the Freedom from Religion Foundation, based in Madison, Wisconsin, reported Kloos to the IRS. The complaint was filed at about the same time that the newspaper published the story about God’s Storehouse.
Court records show that the IRS has been investigating whether God’s Storehouse was operating as a thrift shop rather than as a church and if it impermissibly engaged in political campaign intervention in 2020.
The IRS also is looking at whether God’s Storehouse may be liable for unrelated business income tax from the operation of the coffee shop, according to court records.
The IRS had asked God’s Storehouse for documents, including copies of its bank statements for a two-year period.
The church objected to producing the statements on the grounds the request was overly broad. Although God’s Storehouse did not provide the requested bank statements, it did provide an extensive list of documents.
In December 2021, the IRS notified God’s Storehouse that it intended to contact third parties and informed the church of its right to request a list of people the IRS contacted.
In February 2022, the IRS issued a summons to Kaw Valley Bank. The IRS requested records for all accounts in the name for God’s Storehouse for 2019 and 2020.
God’s Storehouse asked a federal judge to block the summons, arguing that the IRS failed to obtain the proper authorization from an “appropriate high-level Treasury official.”
The church lost in federal court in Kansas and appealed to the 10th Circuit appeals court in Denver, which upheld the summons seeking the bank records.
God’s Storehouse said the summons was invalid because the IRS failed to satisfy requirements applicable to church tax inquiries and examinations.
The church said the IRS official who signed off on the God’s Storehouse inquiry was not an “appropriate high-level Treasury official.”
The court found that a third-party summons seeking the bank records is not a church tax inquiry or examination because it’s not directed to a church.
“IRS’s summons to Kaw Valley sought the bank’s records, not GSH’s records,” the court wrote in its opinion.
The attorney for God’s Storehouse disagreed with the ruling.
“Unfortunately, the 10th Circuit opinion continues to allow the IRS to exploit a procedural loophole to deprive churches of their constitutional protections,” said Ryan Kriegshauser, the attorney for God’s Storehouse.
“While our client is steadfastly committed to continuing the fight for religious liberties, we will review this opinion with our client and proceed as we deem advisable,” Kriegshauser said in a text.
Last fall when he announced his plans to see reelection to the Senate, Kloos criticized the investigation and the complaint filed by the Freedom from Religion Foundation. Kloos’ wife, Pennie, is running for the Kansas House.
Kloos said the foundation was an “atheist group” that had no understanding about him or the God’s Storehouse ministry.
“What’s an atheist group concerned about us as a church? Isn’t that a conflict of interest just starting out?” Kloos said.
“Since when should an atheist group be policing churches and giving information to the IRS?” Kloos asked.
“This needs to pass. They need to let this thing go,” Kloos said. “If they don’t, that’s OK because we’ll keep pushing back until we get the breakthrough that is ours.”
Kloos said the issue transcends God’s Storehouse.
“If an atheistic group can get away with a little church and say, ‘Rick Kloos is politicking,’ or ‘The church is politicking,’ then what other churches are going to be attacked anytime a minister or a Sunday school teacher or someone in the faith community of predominance runs for an office?” he said. “Where does it stop?”
He said God’s Storehouse will not shrink from its role helping the community.
“As we continue to push back on these attacks on our religious liberties,” Kloos said, “we will also continue to do what we have been doing at God’s Storehouse for the past 15 years, every day: ministering to the humanitarian needs across this community and the spiritual needs across this community.”
